Is the Royal Bank of Scotland (RBS) finally on the road to redemption?

By paying the $4.9bn (£3.6bn) penalty imposed on it by the US Justice Department over mortgage securities misconduct perpetrated in the run up to the financial crisis, it is to be hoped that the bank can draw a line under its considerable woes.

After confirming the penalty this week the Justice Department gave an insight into the background chat at the time the RBS was passing on the risk for dubious mortgage backed securities to unsuspecting investors. Staff were well aware what was going on. Senior staff joked about selling “garbage”, committing fraud and about whether they were destroying the US housing economy, or merely “severely damaging” it.

Such talk is dismally reminiscent of the recent report into the bank’s global restructuring group (GRG)) scandal, which found the division responsible for helping struggling small businesses did anything but, with staff at one stage advised: “Sometimes you have to let customers hang themselves”.

The Justice Department’s revelations also came on the same day the RBS was rated worst bank in the UK for customer service by the Competition and Markets Authority, and RBS still faces a little over a year payouts to UK customers who were mis-sold PPI (payment protection insurance).

But most of these troubles relate to the views and policies of executives or senior staff before the financial crisis, and before the bank entered public ownership thanks to a £45bn bail out in 2008 which left 62 per cent of stock in the hands of the taxpayer. RBS chief executive Ross McEwan states: “There is no place for the sort of unacceptable behaviour alleged by the DoJ at the bank we are building today.”

In recent years, the RBS has turned a welcome corner. For some -such as small businesses, there will need to be a period of rehabilitation, but it is going in the right direction. This progress will be helped considerably if an increasingly confident RBS becomes more generous in lending to businesses – something many firms have been crying out for for years now.

RBS could also improve its reputation by listening over branch closures. Ten of the 62 Scottish branches listed for closure are under review and the bank should follow through on pledges to protect branches in towns where there is no other bank.

A healthy RBS is important to Scotland to Scotland’s businesses and its economy, and as one of the biggest private sector employers, to jobs.

It should be recognised that the turnaround at RBS has been remarkable. The bank must use this clean slate to ensure that in future it is a business to be proud of.